Company formation in Estonia

The most common and effective form for establishing a legal entity in Estonia is the Private Limited Company, or PLC for short (OÜ or osaühing in Estonian). The minimum number of participants is 1 founder (shareholder) and 1 member of the Management Board (director or general manager). The liability of the partners in a PLC is limited to their contributions to the share capital (the minimum share capital is 2,500 euros, contribution of funds can be postponed indefinitely).

The name of a company established in Estonia must clearly differ from the names of previously established entities, both in spelling and phonetically. You can check the availability of the desired legal name on the website of the Commercial Register.

No, you do not have to; you have the right not to pay the share capital when incorporating the enterprise. According to current legislation, the contribution of share capital can be postponed indefinitely. If the share capital of a company has not been paid in, such a enterprise is not entitled to pay dividends until the share capital is formed and the founders of such a entity are personally liable for the undertaking’s operations up to the amount of the unpaid contribution.

The share capital of an Estonian company can be paid in cash into the corporate account, by a non-cash contribution by transferring the assets of shareholders to the undertaking’s balance (phones, computers, property rights, etc.) or by an equity issuance, whereby the retained earnings for any reporting period are transferred to the share capital.

Yes, they can; in general, a resident of any country can set up a company in Estonia. Foreigners can become founders and general managers of legal entities registered in Estonia without any restrictions.

Yes, it can; a legal person registered in a foreign country (parent company) can become a founder of an Estonian entity (subsidiary company). In order to incorporate such a structure, we will first need recent (no more than 3 months old) official corporate documents of the foreign corporate structure, which must show the registration details of the legal entity as well as it’s general managers, owners and beneficiaries.

Yes, he/she can; one person can be both founder (shareholder) and general manager (member of the Management Board) of a company in Estonia.

When registering a company, only one intended field of activity is indicated, which is purely informative and does not constitute a binding circumstance for the enterprise. The field of activity should be selected from the EMTAK classifier, which is an adapted version of the international harmonised NACE classifier. Our consultants can help you find and choose the field of activity that best suits your business model.

Estonian companies have the full right to do business and conduct their activities freely in all areas that are not prohibited or restricted by the relevant legislative enactments. It is common practice that the field of activity is not specified in the articles of association, so changing or extending the field of activity does not entail any difficulties or unnecessary bureaucracy. A legal person can be active in several fields of activity at the same time.

Yes, it can; you are free to open and use current accounts with banks and EMI/PSP payment systems outside Estonia. The most popular payment services providing the possibility of opening a current IBAN account are Paysera, Wise and Revolut.

An electronic version of the corporate documents can be found on the website of the Commercial Register. If you need paper versions of the register card, articles of association, memorandum of association and other corporate documents, certified and apostilled, you can order them through us. A detailed price list for corporate documents can be found on the relevant page of our website.

No, it is not required; the general manager has the right to perform his/her duties for free and not to receive any remuneration for his/her activities.

Yes, it is necessary; all undertakings registered in Estonia are obliged to keep accounting records, register all transactions and also keep all primary accounting documents. Also, all legal pesons are obliged to submit annual financial statements to the Commercial Register within 6 months of the end of the business year (by default, no later than 30 June).

Yes, it is necessary; even the companies that did not conduct any business activities during the financial year must submit an annual report (so-called zero balance) to the Commercial Register.

No, there is no corporate income tax for enterprises in Estonia. Company profits are not taxed in any way – you are free to reinvest your earnings in the development of the enterprise, the purchase of fixed assets, securities and so on. The obligation to pay tax at the rate of 20/80, i. e. 25% arises only in the case of actual distribution of profits and payment of dividends to the founders.

The undertaking must register as a VAT payer as soon as the enterprise’s turnover subject to VAT within one business year exceeds 40,000 euros. In other cases, registration as a VAT payer is voluntary.

No, it is not necessary; if the enterprise pays salaries or other benefits to it’s employees or freelancers who are not Estonian tax residents, the undertaking has no tax liability. In such a case, the obligation to declare income and pay taxes arises for the recipients of the payments according to the rules and rates of the jurisdiction of their tax residence.

Estonian enterprises do not have any separate tax identification number (TIN). A registration number is used to identify the legal entity to the tax authorities and other state institutions.

An application for the registration of a company will be processed within 1 working day if it was submitted online on the website of the Commercial Register (company formation through e-Residency) or within 5 working days if the application was submitted through a notary (establishment of a company in person or by a notarised power of attorney).

In order to be able to open a company online on the Internet portal of the Commercial Register, you must have an e-Resident card, which is used to verify your identity and is required for signing the legal person registration application with a digital signature

e-Residency or e-Resident card is a smart card with a microchip that is issued by Estonia to non-residents and gives them digital signature capabilities. The e-Residency can be used to sign documents, identify an individual on the Internet and use electronic services of the Estonian e-state (including the establishment of legal persons).

You can fill out the e-Residency application form in the online environment of the Estonian Police and Border Guard Board. You can pick up your e-Residency starter kit at the following locations around the world.

No, you do not have such an obligation.

An Estonian company must have at least one member of the management board (general manager) and one founder (shareholder). The maximum number of founders and general managers is not established by law.

In order to open a company in Estonia, an application must be submitted to the Commercial Register, which shall include: the corporate name, the personal details of the company general managers, owners and beneficiaries, the company phone number and e-mail address, the legal address, the details of a contact person, the field of activity with EMTAK or NACE code, and the text of the articles of association of the company.

The main and most significant advantage of Estonia over all other countries of the European Union is the absence of corporate tax on retained earnings. This means that all the funds earned and accumulated by the undertaking will not be subject to income tax until profits are distributed and dividends are paid to shareholders. Thus, Estonian enterprises are free to invest their earnings or make investments without having to think about paying corporate taxes.

The activities of legal persons on the territory of Estonia are regulated by the Commercial Code, which is available for review in English.

Yes, absolutely. Estonia is geographically located in northern Europe and has been a full member of the European Union and the common customs area since 2004. If you wish to start a European company and expand your business into the EU, then choosing Estonia as your main jurisdiction will be the best solution for you.

Estonia traditionally holds a leading position among European countries on the Ease of Doing Business Index, and this is no accident. A developed electronic state, the absence of excessive bureaucracy and attractive conditions for foreign investment will make the process of establishing an enterprise on the territory of Estonia as fast and convenient as possible for non-residents.